The results are based on survey responses from 1.124 U.S. auto dealers from Oct. 24 to Nov. 6. Those responses are used to create an index where number over 50 indicate more dealers view conditions as strong rather than weak. When a number dips below 50 the overall sentiment is negative.

Dealer negativity is all over the survey. Not only are dealers negative about the current quarter, that sentiment is carrying over to the start of 2019, moving to below 50 on the index for the first time in the Cox survey’s history.

Why the pessimism? “Slowing customer traffic, growing pressure to reduce prices, and declining profitability aligned with a view of the market that retreated from strong to weak in the aggregate index,” said Cox Automotive Chief Economist Jonathan Smoke, in a statement. “Dealers remain worried about the negative impact of proposed tariffs leading to higher prices, but they are also now seeing a less robust used-vehicle market, which is also notably weaker than last year.”

The downbeat view by dealers marks a sharp reversal of how they felt earlier in the year when surveys taken in the second and third quarters came in strongly positive.

“The big negative swing in expectations that was significantly lower than last quarter and the same time last year is especially alarming,” said Smoke.

What the survey results indicate is that dealers believe the good times are over. The industry is headed towards the fourth straight year of U.S. sales topping 17 million units--a result that’s caught most industry watchers off guard who predicted a sharp falloff in the third and fourth quarters. But rising interest rates, declining vehicle affordability, stingier incentives and fear of tariffs are expected to soon take their toll on showroom traffic and sales.

Car lot, in Springtime, many vehicles for sale, full inventory, aerial view.

Getty

Things are tough on the used vehicle side as well. Dealers are strapped for inventory--especially popular pickup trucks and SUVs. Consumers who want one, but are not able to swing the high sticker prices for new units, are turning to pre-owned vehicles.

Like any survey, the results aren’t unanimous. A good many franchised dealers said they are feeling pretty positive about the sales environment for new vehicles with the new-vehicle sales index dipping to 57 from 60 during Q3. That slight decline attributed to tight inventories and higher interest rates.